commercial property price indices spring forward in may - CoStar Group

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U.S. Composite Indices: Equal- and Value-Weighted, Data through May 2015. 0. 25. 50. 75. 100 ... Index began its recover
 

  CCRSI RELEASE – JULY 2015 (With data through May 2015)

COMMERCIAL PROPERTY PRICE INDICES SPRING FORWARD IN MAY RECORD LEVELS OF CRE SPACE ABSORPTION SUPPORTED BROAD PRICE GAINS This month's CoStar Commercial Repeat Sale Indices (CCRSI) provides the market's first look at May 2015 commercial real estate pricing trends.  Based on  1,258 repeat sales in May 2015 and more than 140,000 repeat sales since 1996, the CCRSI offers the broadest measure of commercial real estate repeat sales activity.   U.S. Composite Indices: Equal- and Value-Weighted, Data through May 2015

U.S. Composite ‐ Value Weighted

U.S. Composite ‐ Equal Weighted

225

Index Value (2000 Dec = 100)

200 175 150 125 100 75 50 25 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

COSTAR COMMERCIAL REPEAT-SALE INDICES JULY 2015 Release (With Data through MAY 2015)

   

    U.S. Equal-Weighted Indices by Market Segment, Data through May 2015

U.S. Investment Grade

U.S. General Commercial

225

Index Value (2000 Dec = 100)

200 175 150 125 100 75 50 25 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

U.S. Pair Count, data through May 2015

U.S. Pair Volume, data through May 2015

U.S. General Commercial Pair Count U.S. Investment Grade Pair Count

2,500

U.S. General Commercial Pair Volume U.S. Investment Grade Pair Volume

$16 $14

Billions of Dollars

$12

1,500

1,000

$10 $8 $6 $4

500 $2

COSTAR COMMERCIAL REPEAT-SALE INDICES JULY 2015 Release (With Data through May 2015)

   

2015

2014

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2012

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2015

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$0

0 2003

Number of Sale Pairs

2,000

    

    U.S. Distress Sale Pairs Percentage, Data through May 2015 U.S. General Commercial Distress Pair %

40% 35% 30% 25% 20% 15% 10% 5% 0% Jan‐08 Apr‐08 Jul‐08 Oct‐08 Jan‐09 Apr‐09 Jul‐09 Oct‐09 Jan‐10 Apr‐10 Jul‐10 Oct‐10 Jan‐11 Apr‐11 Jul‐11 Oct‐11 Jan‐12 Apr‐12 Jul‐12 Oct‐12 Jan‐13 Apr‐13 Jul‐13 Oct‐13 Jan‐14 Apr‐14 Jul‐14 Oct‐14 Jan‐15 Apr‐15

Distressed Sale Pairs as Percentage of Total

U.S. Investment Grade Distress Pair %

Market Fundamentals, Data through June 2015 General Commercial Net Absorption Rate

Investment Grade Net Absorption Rate

0.7%

Net Absorption as Percent of Stock 

0.6% 0.5% 0.4% 0.3% 0.2% 0.1% 0.0% ‐0.1% ‐0.2% ‐0.3% Mar‐07

Mar‐08

Mar‐09

Mar‐10

Mar‐11

Mar‐12

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COSTAR COMMERCIAL REPEAT-SALE INDICES JULY 2015 Release (With Data through May 2015)

   

    CCRSI National Results Highlights 

FOLLOWING SLOWDOWN IN APRIL, CRE PRICES REBOUNDED IN MAY WITH STRONG SHOWING ACROSS THE BOARD.  The two broadest measures of aggregate pricing for commercial properties within the CCRSI—the value-weighted U.S. Composite Index and the equal-weighted U.S. Composite Index—gained 1.4% and 1.7%, respectively, in the month of May 2015. The value-weighted U.S. Composite Index advanced 12.2% in the trailing 12 months ended May 2015, and now stands 12% above its prior peak, reflecting the strong recovery of larger, higher-value properties. The equal-weighted U.S. Composite Index began its recovery later in the cycle but has increased at a faster rate of 14.1% in the trailing 12 months ended May 2015 as smaller commercial properties continued to gain favor with investors.



EQUAL-WEIGHTED INDEX GAINED MOMENTUM. The momentum shift to lower-quality and smaller properties also appeared in the recent growth of the General Commercial segment within CCRSI’s equal-weighted U.S Composite Index. The General Commercial Index advanced 14.6% for the 12 months ended May 2015, the fastest rate among the four major CRE price indices during this time, while its Investment Grade counterpart rose 11.9%.



CRE SPACE ABSORPTION SOARED TO HIGHEST LEVEL YET IN RECOVERY. For the 12 months ended as of the second quarter of 2015, net absorption across the three major commercial property types — office, retail, and industrial — totaled 575.5 million square feet, a 39.3% increase over the 12-month period ended as of the second quarter of 2014, and the highest annual total on record since 2008.



ROBUST LEASING ACTIVITY SUPPORTING PRICE RECOVERY EXTENSION ACROSS MORE MARKETS AND PROPERTY TYPES. Net absorption in the General Commercial segment rose 37% over the 12-month period ended as of the second quarter of 2015. Meanwhile, net absorption in the Investment Grade segment remained equally strong, increasing by nearly 40% as the flight to quality space among commercial tenants continued over the 12-month period ended as of the second quarter of 2015. In the office sector, for example, net absorption within 4- and 5-Star properties grew at nearly three times the rate of properties rated 3-Star or lower during the same period.



INVESTMENT ACTIVITY CONTINUED TO SURGE. Commercial real estate trading activity in the first five months of 2015 was well above last year’s total. The sales volume suggests 2015 could be another record year for commercial real estate acquisitions. In fact, the U.S. 1 composite pair volume of $115.7 billion for the 12 months ended May 2015 was the highest on record for the CCRSI, indicating that investment flows into real estate

remain strong.                                                              1

 Does not include the $4.4 billion sale of Stuyvesant Town‐Peter Cooper Village apartments in New York City in June  2014 via deed in lieu of foreclosure.      COSTAR COMMERCIAL REPEAT-SALE INDICES JULY 2015 Release (With Data through May 2015)

   

    Monthly CCRSI Results, Data through May 2015 1 Month  Earlier 

1 Quarter  Earlier 

1 Year  Earlier 

Trough To  Current 

Value‐Weighted U.S. Composite Index 

1.4% 

2.6% 

12.2% 

79.6%1 

Equal‐Weighted U.S. Composite Index 

1.7% 

2.9% 

14.1% 

41.3%2 

U.S. Investment Grade Index 

1.5% 

2.7% 

11.9% 

55.8%3 

 

1.7%  3.1%  14.6%  U.S. General Commercial Index  40.2%4  1  Trough Date: January 2010      2 Trough Date: March 2011     3 Trough Date: March 2010    4 Trough  Date: March 2011  Market Fundamentals Data through June 2015 Annual Net Absorption (In Millions Of Square Feet)  2012 Q2 

2013 Q2 

   2014 Q2 

2015 Q2 

 

Aggregate  

     314.3  

  

    369.3  

  

 413.2  

  

  575.5  

Investment Grade  

     204.7  

  

    264.0  

  

  292.6  

  

   410.2     

General Commercial   

     109.6  

  

    105.3  

  

      120.6  

  

   165.3     

Note: "Net Absorption" is the change in occupied space, calculated based on  three types of properties: office, retail, and industrial. 

 

 

  

 

About the CoStar Commercial Repeat-Sale Indices The CoStar Commercial Repeat-Sale Indices (CCRSI) is the most comprehensive and accurate measure of commercial real estate prices in the United States. In addition to the national Composite Index (presented in both equal-weighted and value-weighted versions), national Investment Grade Index and national General Commercial Index, which we report monthly, we report quarterly on 30 sub-indices in the CoStar index family. The sub-indices include breakdowns by property sector (office, industrial, retail, multifamily, hospitality, and land), by region of the country (Northeast, South, Midwest, West), by transaction size and quality (general commercial, investment-grade), and by market size (composite index of the prime market areas in the country). The CoStar indices are constructed using a repeat sales methodology, widely considered the most accurate measure of price changes for real estate. This methodology measures the movement in the prices of commercial properties by collecting data on actual transaction prices. When a property is sold more than one time, a sales pair is created. The prices from the first and second sales are then used to calculate price movement for the property. The aggregated price changes from all of the sales pairs are used to create a price index.

COSTAR COMMERCIAL REPEAT-SALE INDICES JULY 2015 Release (With Data through May 2015)

   

    National Composite CRE Price Index

National Indices By Property Type

Regional Indices By Property Type

Regional Indices

All Properties

Office

Northeast

General Commercial

Retail

Midwest

Investment Grade

Industrial

South

Multifamily

West

Prime Market Indices By Property Type

Northeast: Office, Multifamily, Industrial, Retail Midwest: Office, Multifamily, Industrial, Retail South: Office, Multifamily, Industrial, Retail West: Office, Multifamily, Industrial, Retail

Office

Multifamily

Industrial

Retail

Hospitality Land         Prime Office Markets

Prime Industrial Markets

CBSA Listed Alphabetically Boston

CBSA Listed Alphabetically Atlanta

Los Angeles

Chicago

New York

Dallas

Orange County

Houston

San Francisco

Los Angeles

Seattle

Northern New Jersey

Washington, D.C.

Riverside Seattle

COSTAR COMMERCIAL REPEAT-SALE INDICES JULY 2015 Release (With Data through May 2015)

   

    Prime Retail Markets

Prime Multifamily Markets

CBSA Listed Alphabetically Boston Los Angeles New York

CBSA Listed Alphabetically Boston Chicago Houston

Orange County

Los Angeles

San Diego

New York

San Francisco

Orange County

San Jose

San Francisco

Washington. D.C.

San Jose Seattle Washington, D.C.

CONTACT: Richard Simonelli, Vice President ([email protected]). For more information about the CCRSI Indices, including the full accompanying data set and research methodology, legal notices and disclaimer, please visit http://costargroup.com/costar-news/ccrsi.

ABOUT COSTAR GROUP, INC. CoStar Group, Inc. (Nasdaq: CSGP) is the leading provider of commercial real estate information, analytics and online marketplaces. Founded in 1987, CoStar conducts expansive, ongoing research to produce and maintain the largest and most comprehensive database of commercial real estate information. Our suite of online services enables clients to analyze, interpret and gain unmatched insight on commercial property values, market conditions and current availabilities. LoopNet is the most heavily trafficked commercial real estate marketplace online with more than 9 million registered members. Apartments.com, ApartmentFinder.com and ApartmentHomeLiving.com form the premier online apartment resource for renters seeking great apartment homes and provide property managers and owners with a proven platform for marketing their properties. CoStar operates websites with over 22.4 million unique monthly visitors in aggregate as of March 2015. Headquartered in Washington, DC, CoStar maintains offices throughout the U.S. and in Europe and Toronto, Canada with a staff of approximately 3,000 worldwide, including the industry’s largest professional research organization. For more information, visit www.costargroup.com.

COSTAR COMMERCIAL REPEAT-SALE INDICES JULY 2015 Release (With Data through May 2015)

   

    This news release includes "forward-looking statements" including, without limitation, statements regarding CoStar's expectations, beliefs, intentions or strategies regarding the future. These statements are based upon current beliefs and are subject to many risks and uncertainties that could cause actual results to differ materially from these statements. The following factors, among others, could cause or contribute to such differences: the risk that the trends represented or implied by the indices will not continue or produce the results suggested by such trends, including the risk that the level of commercial real estate transaction activity or sales volume is not maintained or increased through the remainder of 2015 and that 2015 is not ultimately another record year for commercial real estate acquisitions; and the risk that investor demand, commercial real estate pricing levels and investment flows into real estate will not continue at the levels or with the trends indicated in this release. More information about potential factors that could cause actual results to differ materially from those discussed in the forward-looking statements include, but are not limited to, those stated in CoStar's filings from time to time with the Securities and Exchange Commission, including in CoStar's Annual Report on Form 10-K for the year ended December 31, 2014, and Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, each of which is filed with the SEC, including in the "Risk Factors" section of the filing, as well as the company's other filings with the SEC available at the SEC's website (www.sec.gov). All forward-looking statements are based on information available to CoStar on the date hereof, and CoStar assumes no obligation to update such statements, whether as a result of new information, future events or otherwise.

COSTAR COMMERCIAL REPEAT-SALE INDICES JULY 2015 Release (With Data through May 2015)